Interim Results

RNS Number : 5256M

Savannah Resources PLC

22 September 2021

 

22 September 2021

Savannah Resources Plc

Interim Results

Savannah Resources plc (the "Company" or "Savannah"), the European lithium development company, is pleased to announce its interim financial results for the six months ended 30 June 2021.

First half and recent highlights include:

Corporate

· Cash balance: Stood at £9.7m as at 30 June (31 December 2020: £2.0m) after the oversubscribed placing completed in April 2021, raising gross proceeds of £10.3m

· Net loss from continuing operations: Reported at £1.4m (2020: £1.1m). The total attributable loss reduced to £1.2m (2020: £6.0m) as there was no repeat of the non-cash write-down (£5.5m) associated with the Oman project divestment

· Corporate Environmental and Social Management System ("ESMS"): Initiated our Corporate ESMS which is being aligned with internationally recognised ESG standards

· Recruitment: To support the Company's continued growth, key new staff with a range of skills have been added to our project and corporate teams in Portugal and the UK respectively

· COVID-19: Mitigation measures continued with staff and stakeholder wellbeing a priority

Mina do Barroso, Portugal

Technical:

· Environmental Impact Assessment ("EIA"): The Portuguese environmental regulator extended the public consultation phase of the review from 2 June 2021 to 16 July 2021. We understand the regulator is now reviewing the submissions received and we expect to receive news on the EIA review process in the final quarter of 2021

· Lab and Field work: Lab-based process design work continued in Australia throughout the period. We expect to be able to return to meaningful fieldwork before the end of the year following the lifting of COVID-related restrictions

· Definitive Feasibility Study ("DFS"): The DFS is now expected to be completed in 2022 following ongoing COVID-restrictions on fieldwork and the definition of EIA requirements from the ongoing EIA process

Commercial:

· Offtake and Investment: Encouraging discussions were ongoing with multiple, well credentialed commercial counterparties during the period and are continuing into the 2H 2021. Useful precedents have been set by the significant number of offtake, investment and M&A transactions in the lithium sector in the year to date

· EV sales: EV-volumes.com reported global 1H 2021 EV sales of 2.65m units (+168% vs. 1H 2020) including 1m vehicles sold in Europe. Full year sales forecast at 6.4m units (2020: 3.2m units)

· Lithium prices: 1H 2021 lithium chemical prices in China rose on average by 80% vs. year-end 2020 and spodumene prices doubled to around US$800/t (source: S&P Global Platts). On 14 September 2021, Pilbara Minerals achieved a price of over US$2,200/t for 5.5% spodumene concentrate at its second online auction

· Partnerships: Savannah became a founding member of the Portuguese Association for the Battery Cluster, created to maximise Portugal's potential across the battery value chain and promoting the country as a future leader in European lithium production

Public and Government Relations:

· Local stakeholder engagement: Savannah continued to engage and inform the local community about the Project through multiple channels; support was also maintained for local ventures and services

· Wider stakeholder engagement: As travel restrictions eased, interaction with civil society, business and academic leaders, and journalists was stepped up. We expect to increase our market and stakeholder engagement activities in the remainder of the year

· Post-COVID Government funding: Savannah is currently assessing the possibility of applying for funding from the Portuguese Government following approval of the country's €16.6bn Recovery & Resilience facility funding by the European Commission

Mutamba Minerals Sands Project, Mozambique

· Fieldwork and studies: Continued during the period dominated by landowner identification and communication programmes, collecting a bulk sample for metallurgical test work by Rio Tinto, and initiating baseline studies for the EIA on each licence

· Business review: A comprehensive review of the project's technical parameters and its future corporate positioning has been undertaken since last October. We remain on track to inform shareholders of the outcome of this review by year end.

CHAIRMAN'S STATEMENT

Savannah has continued to establish its position in the new European lithium value chain effectively, despite the ongoing challenges posed by the COVID pandemic during the first half of 2021. Forecasts of a significant lithium shortage by the middle of this decade and associated higher prices have been in the market for some years but it is still remarkable how rapidly this market has tightened, and prices have risen since late last year. Growing EV uptake is underpinning lithium's recovery with global first half sales, as reported by EV-volumes.com, reaching 2.65m units (+168% vs. 1H20), including over 1m vehicles sold in Europe and 1.15m in China. Lithium chemical prices in China rose on average by 80% in the first half while spodumene prices in Australia doubled to around US$800/t (source: S&P Global Platts). Savannah was able to utilise this step change in the market to complete an oversubscribed placing to new and existing shareholders to provide greater working capital for the exciting period that lies ahead. We were also able to broaden our commercial negotiations with multiple parties all keen to secure exposure to Mina do Barroso's lithium.

With EV sales expected to accelerate during the second half of the year to reach 6.4m units, almost double 2020's annual sales, and scant lithium inventory available, prices have continued to rise in the second half of the year. Lithium chemical prices in China are now up on average 170% versus. December 2020, and the price of Australian spodumene concentrate as reported by Pilbara Minerals at its second online auction on 14 September is more than 460% higher at over US$2,200/t. Shareholders will remember that our 2018 Scoping Study on Mina do Barroso assumed an average sales price for spodumene of US$685/t, so from an economic perspective, the future of Mina do Barroso looks ever brighter. Our focus therefore remains on turning that potential into reality and developing the project in a responsible manner which minimises its impact and shares economic and other benefits with local communities.

With the COVID-restrictions now easing, we look forward to getting back in the field to resume gathering the data we need to complete the Definitive Feasibility Study ("DFS"). To this end, we have added to our in-country technical team. We are also aware that the technical robustness of the project is only one factor in our future success, and that we must work equally hard to ensure sufficient support for the project among the key stakeholder groups. Hence, we have added capacity to our governmental and public relations efforts in Portugal and expanded our investor relations and media team in the UK. I take this opportunity to welcome our new staff members and advisers to the Savannah family and we look forward to announcing more appointments as we continue to grow the business and move towards construction and production in Portugal.

In Mozambique, we remain active on the ground as we continue to progress the key tasks as the joint venture with Rio Tinto moves the project forward towards development. We have been also voluntarily playing our part in the in-country COVID vaccination programme and have maintained our strong links with our stakeholder communities and key administrators.

Overarching our work on each project is the progress we are making in formalising, expanding and equalising our Corporate Social Responsibility ("CSR") and Environmental, Social & Governance ("ESG") activities through our Corporate Environmental and Social Management System ("ESMS") which we announced in May. Savannah has always made a firm commitment to CSR but by formalising our efforts across the Company we will be best placed not only to deliver effective CSR programmes for our project stakeholders but also effectively measure our performance and therefore meet and surpass the expectations of investors and lenders who are increasingly focusing on these parameters.

Mina do Barroso, Portugal

At Mina do Barroso during the first half of the year, we continued to move ever closer to the next three major project milestones: the Environmental Impact Assessment ("EIA"), an offtake agreement, and the DFS. COVID restrictions aside, the Board and I acknowledge that reaching these milestones is taking longer than we had first envisaged. However, Mina do Barroso and its significant lithium production represents a wholly new endeavour for Portugal, the European Union, and Savannah. Hence, it is vital that the project is executed in a way that demonstrates that this new industry is one that can be conducted responsibly, and which brings far-reaching benefits. There can be no doubt that the recent price movements in lithium which I have already highlighted, give a clear indication of how important it is for Europe to begin to develop its domestic supply of such critical raw materials if it is to meet its own long term energy transition and climate change goals.

Regarding the EIA, as we flagged in the 2020 Annual Report, Agência Portuguesa do Ambiente ("APA"), the Portuguese environmental regulator, revised the closing date for the public consultation phase of the review programme from 2 June 2021 to 16 July 2021. We welcomed the opportunity for all interested parties to register their views on the project and will respond to APA as quickly and comprehensively as we can if it requests any further information from us. We understand APA is now reviewing the submissions received and we expect to receive news on the EIA review process in the final quarter of 2021. Should we receive a 'Declaration of the Environmental Impact' this milestone won't represent the conclusion of the environmental licencing process as approval of detailed final designs is subsequently required, but it will demonstrate the Regulator's satisfaction with the project's operating parameters and Savannah's innovative plans to eliminate, mitigate and manage any environmental and social impacts, and to utilise the project to create meaningful long-term benefits for stakeholders throughout Portugal and beyond.

As we have highlighted previously, conducting the outstanding fieldwork required for the DFS has been severely impacted by COVID-related restrictions in the past 18 months. Pleasingly, as restrictions lift and contractor availability improves, we expect to be able to return to meaningful field work before the end of the year. We have also talked previously about the need for APA to state its preferences on several features of the project on which it required Savannah to present it with options in our EIA submission. Until these decisions are made as part of the EIA approval process, Savannah won't be able to fully finalise the project design and encapsulate that in the DFS. A brighter point for the DFS's progression has been the lab-based process design work in Australia which has been continuing with little disruption throughout the period. Overall, however, after much effort internally to revise and rework the DFS schedule, shareholders should expect its conclusion next year and not by the end of 2021 as previously guided. Alongside the DFS we have also begun to engage with Portugal's leading power companies around the provision of wholly renewable energy to the project and some leading manufacturers of mobile mining plant and equipment regarding the potential to supply electrically powered units to the project in the future.

While referring to fieldwork, I am also pleased to report that our programme of land acquisition across the C-100 Mining Lease area which covers the project has progressed well since the turn of the year and will be continuing alongside our other project commitments for the remainder of 2021 and beyond. We have been delighted to be able to strike mutually beneficial agreements with a number of local landowners which will allow Savannah to own, manage and remediate these areas responsibly during the project's life, before returning them to the community once the project has ceased operating.

On a commercial front, buoyed by the much stronger lithium price environment, encouraging discussions are ongoing around offtake and associated investment with multiple, well credentialed counterparties. This includes with Galp Energia, SGPS, S.A. ("Galp") and other European and non-European industrial groups. A significant number of offtake, investment and M&A transactions have been completed in the lithium sector during the year to date which set useful precedents for Savannah in its own commercial discussions. We hope to bring more news on the project's future commercial arrangements later in the year.

Away from the project itself, we continue to consolidate our position in Portugal's commercial and political spheres as we receive growing recognition for the critical position Savannah will play as the main supplier of raw material to the country's much anticipated new lithium industry. In June we announced that we had become a founding member of the new Portuguese Association for the Battery Cluster which brings together a large group of industrial, academic and government bodies to work together to develop a new lithium-ion battery industry in Portugal under the co-ordination of the International Nanotechnology Laboratory.

Portugal has also been the first country to have its post-COVID Recovery and Resilience facility funding plan approved by the European Commission with €2.2bn of the €16.6bn package already received. With nearly €1bn of this package earmarked for business innovation and green agendas, Savannah is currently assessing the possibility of applying for funding from this facility to put towards the project's capital expenditure.

With travel restrictions now easing, David Archer, our CEO, has been spending an extended period of time on the ground in Portugal in recent weeks working closely with our in-country team and our public and governmental relationship advisers. This has resulted in a series of meetings with key government officials, leaders from the business and academic communities, potential commercial partners and journalists from national and international publications. We expect to increase our marketing and stakeholder engagement activities still further in the remainder of the year.

We continue to believe that our proposals for the development and operation of Mina do Barroso combined with our proposals around sharing the project's economic and social benefits with stakeholders represent a modern and responsible approach to managing the production of a raw material essential to the transition to cleaner energy provision and reduced transport-related greenhouse gas emissions. The Portuguese Government has stated its desire to create a new lithium industry in the country based on its enviable resources of the mineral and the European Commission, through its 2020 Action Plan on Critical Raw Materials, has set forward its target of securing access to reliable sources of raw materials to support Europe's Green Deal and to maintain Europe's leadership in technologies of the future. Savannah would be delighted to be part of making these targets into a reality.

Mineral Sands Project, Mozambique

As I outlined in my statement in the 2020 Annual Results in June, there are three elements to Savannah's work on the Mutamba Minerals sands project in Mozambique; licence-related studies and fieldwork; our engagement programmes; and the business and project review.

Despite ongoing COVID-related restrictions and cases amongst our own staff, work on the ground has continued (with appropriate safety protocols) as we seek to ensure compliance with the requirements set by the Mining Licences the consortium was awarded in late 2019 and early 2020. Identification and communication with relevant landowners to secure land use and utilisation agreements (DUATs) has been the major work programme, but the team has also been able to produce a bulk sample of material for a metallurgical test work programme being run by Rio Tinto overseas and is underway with baseline studies for the EIA work on each of the licences.

Regarding the business review we initiated last autumn, we continue to work very closely on this with our consultant, Bruce Griffin of Farview Solutions, and Rio Tinto. Since that time, we have carried out a comprehensive review of the project's technical parameters and its future corporate positioning. As a result, we believe that we have identified a suitable course of action and remain on track to inform shareholders of the outcome before the end of the year.

Corporate Social Responsibility

Our Corporate ESMS is being aligned with internationally recognised ESG standards, namely the requirements of the International Finance Corporation's Performance Standards on Environmental and Social Sustainability, as well as the World Bank Group's Environmental Health & Safety, Mining and General Guidelines. As a UK listed entity, the policy will also reflect the principles and provisions of the Quoted Companies Alliance's Corporate Governance Code. Savannah's operating subsidiaries will be responsible for ESG management and performance at their respective projects, through the development and implementation of project-specific ESMSs, aligned with the Corporate ESMS, and in compliance with all applicable ESG-related laws, regulations and permits of the host country.

In Portugal during the first half of the year, we were delighted to be able to re-open our local Information Centre in May, staffed by a new recruit from the Boticas area, after its closure due to COVID-related restrictions. The Information Centre is currently displaying a 3D model of the proposed project, so that residents can get a better understanding of the project's layout and the steps being taken to minimise its impact on the local environment. While the EIA review process is ongoing (there were two public sessions held in May hosted by APA), Savannah continues to engage with the local community keeping residents informed about APA's review process, the Benefit Sharing and the Good Neighbour Plans that have been proposed, and by making further donations of locally purchased provisions to the area's firefighting team. We have also maintained our multi-channel communication through newsletters, content in local publications and radio announcements. I have already touched on our engagement with national level media and we will continue this engagement in the remainder of the year as interest builds in Portugal's lithium battery chain, while maintaining our locally focused communication efforts as well as sponsorship of local rally car and mountain biking teams.

In Mozambique, the Company made COVID-19 vaccinations available to all staff and their adult family members, and also purchased and donated 200 double vaccines to the Ministry of Health in Inhambane Province to help protect vulnerable individuals. We were also delighted to provide support to the Provincial Environment Day which helped to raise awareness of Environmental issues in the Province and we remain committed to, and supportive of, other community interventions in Jangamo and Inharrime districts

Financial Summary

Savannah recorded a first half net loss from continuing operations of £1.4m (2020: £1.1m) with much of the £0.3m increase the result of a move from an exchange rate gain in 1H 2020 to an exchange rate loss in 1H 2021. However, without the one-off write-down (£5.5m) associated with the Oman project divestment, which was recorded in last year's accounts, the total attributable loss reduced significantly to £1.2m (2020: £6.0m).

Of greater interest to shareholders will be the Group's cash balance which stood at £9.7m on 30 June (2020: £2.0m, 31 December 2020) after the oversubscribed placing, raising £10.3m gross proceeds in April. This stronger cash position, along with a £0.6m increase in Intangible Assets to £17.8m resulted in a 42% increase in Savannah's Net Assets to £29.1m (2020: £20.5m).

Outlook

The Board and I are very grateful for the ongoing interest and commitment shown towards the Company by its shareholders. With the capital now in reserves, Savannah is well placed to press ahead with its work programmes at Mina do Barroso and its engagement with all stakeholders and relevant commercial groups. We also have sufficient capital available to meet our ongoing commitments in Mozambique. As ever, our dedicated staff will undertake this work and I thank them for their efforts to date and for their efforts in the future.

The lithium market is proving to be an exciting and rapidly developing sector with Europe set to be a major part of the world's new lithium battery industry. Savannah is determined to take its place in this market and we look forward to reporting on developments relating to the three project milestones I have outlined above from 4Q 2021 onwards. We also look forward to updating the market on Mutamba, so that the project's stakeholders and our shareholders are clear on its future direction and that of Savannah.

Matthew King

Chairman

Date: 21 September 2021

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE SIX MONTHS ENDED 30 JUNE 2021

	Notes	Unaudited Six months to 30 June 2021	Unaudited Six months to 30 June 2020	Audited Year ended 31 December 2020
		£	£	£
CONTINUING OPERATIONS
Revenue		-	-	-
Other Income		-	-	26,099
Administrative Expenses		(1,443,120)	(1,080,385)	(2,988,663)
OPERATING LOSS		(1,443,120)	(1,080,385)	(2,962,564)
Finance Income		12,711	21,789	38,747
Finance Costs		(3,671)	(448)	(765)
LOSS FROM CONTINUING OPERATIONS BEFORE AND AFTER TAX		(1,434,080)	(1,059,044)	(2,924,582)
LOSS ON DISCONTINUED OPERATIONS BEFORE AND AFTER TAX		-	(5,469,581)	(5,401,176)
LOSS BEFORE AND AFTER TAX ATTRIBUTABLE TO EQUITY OWNERS OF THE PARENT		(1,434,080)	(6,528,625)	(8,325,758)
OTHER COMPREHENSIVE INCOME
Items that will not be reclassified to Profit or Loss:
Net change in Fair Value through Other Comprehensive Income of Equity Investments		100,060	(13,210)	320,151
Items that will or may be reclassified to Profit or Loss:
Exchange Gains / (Losses) arising on translation of foreign operations		131,362	589,230	(163,284)
OTHER COMPREHENSIVE INCOME FOR THE PERIOD		231,422	576,020	156,867
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD ATTRIBUTABLE TO EQUITY OWNERS OF THE PARENT		(1,202,658)	(5,952,605)	(8,168,891)
Loss per share attributable to Equity Owners of the parent expressed in pence per share:
Basic and Diluted
From Operations	3	(0.09)	(0.50)	(0.62)
From Continued Operations	3	(0.09)	(0.08)	(0.22)
From Discontinued Operations	3	-	(0.42)	(0.40)

The notes form part of this Interim Financial Report.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 30 JUNE 2021

	Notes	Unaudited 30 June	Unaudited 30 June	Audited 31 December
		2021	2020	2020
		£	£	£
ASSETS
NON-CURRENT ASSETS
Intangible Assets	4	17,836,604	16,893,437	17,246,222
Right-of-Use Assets		12,256	31,237	21,709
Other Intangible Assets		-	8,920	6,682
Property, Plant and Equipment	5	1,064,198	1,259,197	973,528
Other Non-Current Assets	7	70,803	83,648	73,530
Bank Deposits	7	687,467	698,411	590,175
TOTAL NON-CURRENT ASSETS		19,671,328	18,974,850	18,911,846
CURRENT ASSETS
Investments		66,002	25,333	606,245
Trade and Other Receivables	6	423,513	173,688	194,301
Other Current Assets	7	16,137	16,141	13,670
Cash and Cash Equivalents		9,659,326	1,714,040	2,000,209
Assets in Disposal Groups Classified as Held for Sale		-	437,007	-
TOTAL CURRENT ASSETS		10,164,978	2,366,209	2,814,425
TOTAL ASSETS		29,836,306	21,341,059	21,726,271
EQUITY AND LIABILITIES
SHAREHOLDERS' EQUITY
Share Capital	9	16,889,598	12,989,598	14,309,910
Share Premium		41,695,948	33,538,187	34,474,884
Merger Reserve		6,683,000	6,683,000	6,683,000
Foreign Currency Reserve		(62,179)	558,973	(193,541)
Warrant Reserve		12,157	942,802	12,157
Share Based Payment Reserve		152,335	370,695	393,865
FVTOCI Reserve		(14,120)	(56,649)	276,712
Retained Earnings		(36,214,631)	(34,604,250)	(35,450,713)
TOTAL EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT		29,142,108	20,422,356	20,506,274
LIABILITIES
NON-CURRENT LIABILITIES
Lease Liabilities		-	6,728	1,130
TOTAL NON-CURRENT LIABILITIES			6,728	1,130
CURRENT LIABILITIES
Lease Liabilities		6,477	15,422	11,608
Trade and Other Payables	8	687,721	793,409	1,207,259
Liabilities Directly Associated with Assets in Disposal Groups Classified as Held for Sale		-	103,144	-
TOTAL CURRENT LIABILITIES		694,198	911,975	1,218,867
TOTAL LIABILITIES		694,198	918,703	1,219,997
TOTAL EQUITY AND LIABILITIES		29,836,306	21,341,059	21,726,271

The Interim Financial Report was approved by the Board of Directors on 21 September 2021 and was signed on its behalf by:

…..

David Archer

Chief Executive Officer

Company number: 07307107

The notes form part of this Interim Financial Report.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE SIX MONTHS ENDED 30 JUNE 2021

	Share Capital £	Share Premium £	Merger Reserve £	Foreign Currency Reserve £	Warrant Reserve £	Share Based Payment Reserve £	FVTOCI Reserve £	Retained Earnings £	Total Equity £
At 1 January 2020	12,974,598	33,511,787	6,683,000	(30,257)	975,679	410,121	(43,439)	(28,163,712)	26,317,777
Loss for the period	-	-	-	-	-	-	-	(6,528,625)	(6,528,625)
Other Comprehensive Income	-	-	-	589,230	-	-	(13,210)	-	576,020
Total Comprehensive Income for the period	-	-	-	589,230	-	-	(13,210)	(6,528,625)	(5,952,605)
Exercised Options	15,000	26,400	-	-	-	(16,650)	-	16,650	41,400
Lapse of Options	-	-	-	-	-	(38,560)	-	38,560	-
Lapse of Warrants	-	-	-	-	(32,877)	-	-	32,877	-
Share Based Payment charges	-	-	-	-	-	15,784	-	-	15,784
At 30 June 2020	12,989,598	33,538,187	6,683,000	558,973	942,802	370,695	(56,649)	(34,604,250)	20,422,356
Loss for the period	-	-	-	-	-	-	-	(1,797,133)	(1,797,133)
Other Comprehensive Income	-	-	-	(752,514)	-	-	333,361	-	(419,153)
Total Comprehensive Income for the period	-	-	-	(752,514)	-	-	333,361	(1,797,133)	(2,216,286)
Issue of Share Capital (net of expenses)	1,300,113	920,537	-	-	-	-	-	-	2,220,650
Shares issued in lieu	20,199	16,160	-	-	-	-	-	-	36,359
Share Based Payment charges	-	-	-	-	-	43,195	-	-	43,195
Exercise of options
Lapse of Options	-	-	-	-	-	(20,025)	-	20,025	-
Lapse of Warrants	-	-	-	-	(930,645)	-	-	930,645	-
At 31 December 2020	14,309,910	34,474,884	6,683,000	(193,541)	12,157	393,865	276,712	(35,450,713)	20,506,274

Loss for the period	-	-	-	-	-	-	-	(1,434,080)	(1,434,080)
Other Comprehensive Income	-	-	-	131,362	-	-	(290,832)	390,892	231,422
Total Comprehensive Income for the period	-	-	-	131,362	-	-	(290,832)	(1,043,188)	(1,202,658)
Issue of Share Capital (net of expenses)	2,579,688	7,221,064	-	-	-	-	-	-	9,800,752
Lapse of Options	-	-	-	-	-	(279,270)	-	279,270	-
Share Based Payment charges	-	-	-	-	-	37,740	-	-	37,740
At 30 June 2021	16,889,598	41,695,948	6,683,000	(62,179)	12,157	152,335	(14,120)	(36,214,631)	29,142,108

The notes form part of this Interim Financial Report.

CONSOLIDATED CASH FLOW STATEMENT

FOR THE SIX MONTHS ENDED 30 JUNE 2021

	Notes	Unaudited Six months to June 2021 £	Unaudited Six months to June 2020 £	Audited Year ended December 2020 £
Cash Flows used in Operating Activities
Loss for the period		(1,434,080)	(6,528,625)	(8,325,758)
Depreciation and Amortisation charges	5	19,626	23,904	44,663
Impairment of Assets classified as Held for Sale		-	5,370,130	-
Impairment of Other Intangible Assets		5,948	-	-
Share Based Payments Reserve charge		37,740	15,784	58,979
Shares issued in lieu of payments to suppliers		-	-	36,359
Finance Income		(12,711)	(21,789)	(38,747)
Finance Expense		3,671	448	765
Exchange Losses / (Gains)		120,501	(133,412)	(37,580)
Loss on sale of discontinued operations		-	-	5,373,633
Cash Flow from Operating Activities before changes in Working Capital		(1,259,305)	(1,273,560)	(2,887,686)
Decrease in Trade and Other Receivables		29,212	119,010	176,312
(Decrease) / Increase in Trade and Other Payables		(464,981)	149,116	443,541
Net Cash used in Operating Activities		(1,695,074)	(1,005,434)	(2,267,833)
Cash flow used in Investing Activities
Purchase of Intangible Exploration Assets		(685,970)	(912,101)	(1,577,532)
Purchase of Right-of-Use assets		(798)	-	-
Purchase of Tangible Fixed Assets		(20,027)	(680)	(2,721)
Purchase of Investments		-	(1,782)	-
Proceeds from sale of Investments		462,115	-	3,272
Bank Deposits for Mining Licences		-	-	57,319
Interest received		12,711	21,789	38,747
Proceeds from sale of discontinued operations		-	-	27,543
Net Cash used in Investing Activities		(231,969)	(892,774)	(1,453,372)
Cash Flow from/(used in) Financing Activities
Proceeds from issues of Ordinary Shares (net of expenses)		9,704,501	41,400	2,220,650
Proceeds from exercise of share options		-	-	41,400
Principal paid on Lease Liabilities		(6,263)	(8,900)	(18,310)
Interest paid		(3,671)	(448)	(765)
Net Cash from Financing Activities		9,694,567	32,052	2,242,975
Increase / (Decrease) in Cash and Cash Equivalents		7,767,524	(1,866,156)	(1,478,230)
Cash and Cash Equivalents at beginning of period		2,000,209	3,484,781	3,484,781
Exchange (Losses) / Gains on Cash and Cash Equivalents		(108,407)	95,415	(6,342)
Cash and Cash Equivalents at end of period		9,659,326	1,714,040	2,000,209

The notes form part of this Interim Financial Report.

NOTES TO THE CONSOLIDATED INTERIM FINANCIAL REPORT

FOR THE SIX MONTHS ENDED 30 JUNE 2021

1.  BASIS OF PREPARATION

The financial information set out in this report is based on the Consolidated Financial Statements of Savannah Resources Plc (the 'Company') and its subsidiary companies (together referred to as the 'Group'). The Interim Financial Report of the Group for the six months ended 30 June 2021, which is unaudited, was approved by the Board on 21 September 2021. The financial information contained in this interim report does not constitute statutory accounts as defined by s434 of the Companies Act 2006. The statutory accounts for the year ended 31 December 2020 have been filed with the Registrar of Companies. The Auditors' Report on those accounts was unqualified and did not contain a statement under section 498 (2) or 498 (3) of the Companies Act 2006.

The financial information set out in this report has been prepared in accordance with the accounting policies set out in the Annual Report and Financial Statements of Savannah Resources Plc for the year ended 31 December 2020. New standards and amendments to IFRS effective as of 1 January 2021 have been reviewed by the Group and there has been no material impact on the financial information set out in this report as a result of these standards and amendments.

The Group Interim Financial Report is presented in Pound Sterling.

Going Concern

In common with many mineral exploration companies, the Company has raised equity finance to fund its activities. The Group had cash balance of £9.7m at 30 June 2021.

The Directors have reviewed the cash-flow projection for the Group and concluded that it has sufficient finance in place to meet its financial commitments for at least 12 months.

In forming their view, the directors have considered the impacts of COVID-19 related restrictions and potential future delays on the work schedule. Whilst the potential future impacts are unknown, the Board has considered the effect that additional delays in the work schedule could have on the Group's available cash resources. Having factored in reasonably plausible scenarios and reasonable mitigating actions (for example, the ability to reduce its uncommitted future expenditure), the director's consider sufficient cash balance are maintained under each scenario and that the Company will be able to meet its obligations as they fall due.

Accordingly, the Directors have concluded that these circumstances form a reasonable expectation that the Group has adequate resources to continue in operational existence, for the foreseeable future. For these reasons, the Directors continue to adopt the going concern basis in preparing the Annual Report and Accounts.

2.  SEGMENTAL REPORTING

The Group complies with IFRS 8 Operating Segments, which requires operating segments to be identified on the basis of internal reports about components of the Group that are regularly reviewed by the chief operating decision maker, which the Company considers to be the Board of Directors. In the opinion of the Directors, the operations of the Group are comprised of exploration and development in Portugal, exploration and development in Mozambique, headquarter and corporate costs and the Company's third party investments and the discontinued operation in Oman.

Based on the Group's current stage of development there are no external revenues associated to the segments detailed below. For exploration and development in Portugal, Mozambique and the discontinued operation in Oman the segments are calculated by the summation of the balances in the legal entities which are readily identifiable to each of the segmental activities. In the case of the Investments, this is calculated by analysis of the specific related investment instruments. Recharges between segments are at cost (including transfer price charge) and included in each segment below. Inter-company loans are eliminated to zero and not included in each segment below.

	Mozambique Mineral Sands	Portugal Lithium		HQ and Corporate		Investments		Elimination		Total
	£	£		£		£		£		£
Period 30 June 2021
Revenue 1	-	539,496		385,655		-		(925,151)		-
Finance Costs	(3,557)	(114)		-		-		-		(3,671)
Interest Income	12,356	-		355		-		-		12,711
Share Based Payments	-	-		(37,740)		-		-		(37,740)
Impairment of Assets	-	-		(5,948)		-		-		(5,948)
Loss for the period	(209,550)	(589,510)		(635,020)		-		-		(1,434,080)
Total Assets	6,097,829	13,790,051		9,882,424		66,002		-		29,836,306
Total Non-Current Assets	5,975,203	13,689,348		6,777		-		-		19,671,328
Additions to Non-Current Assets	255,871	468,602		-		-		-		724,473
Total Current Assets	122,626	100,703		9,875,647		66,002		-		10,164,978
Total Liabilities	(23,671)	(171,796)		(498,731)		-		-		(694,198)

	Discontinued Operation Oman Copper	Mozambique Mineral Sands	Portugal   Lithium	HQ and corporate	Invest-ments	Elimination	Total
	£	£	£	£	£	£	£
Period 31 December 2020
Revenue 1	-	30,198	691,100	582,304	-	(1,303,602)	-
Finance Costs	-	-	(317)	-	-	-	(317)
Interest Income	-	16,475	-	483	-	-	16,958
Share based payments	-	-	-	(43,195)	-	-	(43,195)
Loss for the year	68,405	(198,827)	(748,551)	(918,160)	-	-	(1,797,133)
Total Assets	-	5,403,090	13,917,231	1,799,705	606,245	-	21,726,271
Total Non-Current Assets	-	5,274,621	13,624,502	12,723	-	-	18,911,846
Additions to Non-Current Assets	-	37,203	539,374	-	-	-	576,577
Total Current Assets	-	128,469	292,729	1,786,982	606,245	-	2,814,425
Total Liabilities	-	(65,977)	(260,023)	(893,997)	-	-	(1,219,997)

	Discontinued Operation Oman Copper	Mozambique Mineral Sands	Portugal Lithium	HQ and Corporate	Invest-ments	Elimination	Total
	£	£	£	£	£	£	£
Period 30 June 2020
Revenue 1	-	27,409	419,730	344,515	-	(791,654)	-
Finance Costs	-	-	(448)	-	-	-	(448)
Interest Income	-	17,453	-	4,336	-	-	21,789
Share Based Payments	-	-	-	(15,784)	-	-	(15,784)
Impairment of Assets	(5,370,130)	-	-	-	-	-	(5,370,130)
Loss for the period	(5,469,581)	(197,750)	(470,576)	(390,718)	-	-	(6,528,625)
Total Assets	437,007	5,803,639	13,417,870	1,657,210	25,333	-	21,341,059
Total Non-Current Assets	-	5,724,855	13,228,272	21,723	-	-	18,974,850
Additions to Non-Current Assets	79,122	49,139	555,937	-	-	-	684,198
Total Current Assets	437,007	78,784	522,951	1,302,134	25,333	-	2,366,209
Total Liabilities	(103,144)	(34,119)	(290,951)	(490,489)	-	-	(918,703)

¹ Revenues included in the Portugal Lithium segment include £539,496 (31 December 2020: £691,000; 30 June 2020: £419,730) related to intercompany recharges within this segment and therefore eliminated in the Elimination column

3.    EARNINGS PER SHARE

  Basic earnings per share is calculated by dividing the earnings attributable to the ordinary shareholders by the weighted average number of ordinary shares outstanding during the period.

  In accordance with IAS 33 as the Group is reporting a loss for both this and the preceding period the share options are not considered dilutive because the exercise of share options and warrants would have the effect of reducing the loss per share.

Reconciliations are set out below:

	Unaudited Six months to 30 June 2021	Unaudited Six months to 30 June 2020	Audited Year ended 31 December 2020
Basic and Diluted Loss per Share:
Losses attributable to Ordinary Shareholders (£):
Total Loss for the period (£)	(1,434,080)	(6,528,625)	(8,325,758)
Total Loss for the period from Continuing Operations (£)	(1,434,080)	(1,059,044)	(2,924,582)
Total Loss for the period from Discontinued Operations (£)	-	(5,469,581)	(5,401,176)
Weighted average number of shares (number)	1,518,176,396	1,295,376,368	1,343,743,432
Loss per share - total loss for the period from Operations (£)	(0.00094)	(0.0050)	(0.0062)
Loss per share - total loss for the period from Continuing Operations (£)	(0.00094)	(0.0008)	(0.0022)
Loss per share - total loss for the period from Discontinued Operations (£)	-	(0.0042)	(0.0040)

4.    INTANGIBLE ASSETS

			Exploration and Evaluation Assets
			£
Cost
At 1 January 2020			21,208,400
Additions			734,616
Transfer from Other Intangible Assets			(279,850)
Disposal assets on liquidation			(140,024)
Exchange differences			740,425
At 30 June 2020			22,263,567
Additions			774,178
Transfer to Assets classified as Held for Sale			(5,370,130)
Exchange difference			(421,393)
At 31 December 2020			17,246,222
Additions			687,447
Exchange differences			(97,065)
At 30 June 2021			17,836,604

Depreciation and Impairment
At 1 January 2020		140,024
Reverse on disposal of assets on liquidation		(140,024)
Impairment charge related to assets transferred to held for sale		5,370,130
At 30 June 2020		5,370,130
Transfer to Assets classified as Held for Sale		(5,370,130)
At 31 December 2020		-
At 30 June 2021		-
Net Book Value
At 1 January 2020		21,068,376
At 30 June 2020		16,893,437
At 31 December 2020		17,246,222
At 30 June 2021		17,836,604

In 2018 the Group started the process of divesting its investment in Finkallio Oy, and at 31 December 2018 the Exploration and Evaluation Assets held by the Company were fully impaired. In 2019 the Group started the process to liquidate Finkallio Oy, which was completed on 4 May 2020.

In 2018 the Board announced that a strategic review was being conducted in respect of the Oman assets to identify the best outcome for Savannah and its shareholders. In 2020 the progress towards an agreement for sale was substantial with the disposal expected to be completed prior to the end of 2020, and therefore the assets and liabilities of the Omani operations were classified as Held for Sale at 30 June 2020 with the disposal completed in October 2020.

5.  PROPERTY, PLANT AND EQUIPMENT

	Motor Vehicles	Office Equipment	Plant and Machinery	Land	Total
					£
Cost
At 1 January 2020	87,902	43,026	1,241,756	53,332	1,426,016
Additions	-	680	-	-	680
Transfer to Assets classified as Held for Sale	(36,770)	(10,293)	-	-	(47,063)
Exchange differences	10,173	1,061	(69,084)	3,783	(54,067)
At 30 June 2020	61,305	34,474	1,172,672	57,115	1,325,566
Additions	1,662	379	-	-	2,041
Exchange difference	(4,741)	(2439)	(180,785)	(778)	(188,743)
At 31 December 2020	58,226	32,414	991,887	56,337	1,138,864
Additions	-	20,027	-	-	20,027
Exchange differences	(2,591)	425	157,227	(2,506)	152,555
At 30 June 2021	55,635	52,866	1,149,114	53,831	1,311,446

Depreciation
At 1 January 2020	54,548	34,239	-	-	88,787
Charge for the period	14,081	3,276	-	-	17,357
Transfer to Assets classified as Held for Sale	(36,770)	(10,293)	-	-	(47,063)
Exchange differences	6,251	1,037	-	-	7,288
At 30 June 2020	38,110	28,259	-	-	66,369
Charge for the period	318	4,632	99,189	-	104,139
Exchange difference	(2,560)	(2,612)	-	-	(5,172)
At 31 December 2020	35,868	30,279	99,189	-	165,336
Charge for the period	6,127	4,211	57,456	-	67,794
Exchange differences	(492)	(1,113)	15,723	-	14,118
At 30 June 2021	41,503	33,377	172,368	-	247,248

Net Book Value
At 30 June 2020	23,195	6,215	1,172,672	57,115	1,259,197
At 31 December 2020	22,358	2,135	892,698	56,337	973,528
At 30 June 2021	14,132	19,489	976,746	53,831	1,064,198

Plant and Machinery depreciation amounting to £57,456 (31 December 2020: £99,189) is capitalised in Exploration and Evaluation assets (Note 4).

6.  TRADE AND OTHER RECEIVABLES

		Unaudited 30 June 2021	Unaudited 30 June 2020	Audited 31 December 2020
		£	£	£
Current
VAT recoverable		63,253	108,155	98,852
Other Receivables		360,260	65,533	95,449
Total Current Trade and Other Receivables		423,513	173,688	194,301

7.  OTHER CURRENT AND NON-CURRENT ASSETS

		Unaudited 30 June 2021	Unaudited 30 June 2020	Audited 31 December 2020
		£	£	£
Non-Current
Guarantees		62,674	66,497	65,592
Cash deposits		687,467	698,411	590,175
Other		8,129	17,151	7,938
Total Other Non-Current Assets		758,270	782,059	663,705

Current
Other		16,137	16,141	13,670
Total Other Current Assets		16,137	16,141	13,670

8.    TRADE AND OTHER PAYABLES

		Unaudited 30 June 2021	Unaudited 30 June 2020	Audited 31 December 2020
		£	£	£
Current
Trade Payables		398,923	438,300	357,247
Other Payables		100,315	160,587	136,935
Accruals and Deferred Income		188,483	194,522	713,077
Total Current Trade and Other Payables		687,721	793,409	1,207,259

9.  SHARE CAPITAL

  Allotted, issued and fully paid

	Six months to 30 June 2021		Six months to 30 June 2020		Six months to 31 December 2020
	£0.01 ordinary shares number	£	£0.01 ordinary shares number	£	£0.01 ordinary shares number	£
At beginning of period	1,430,991,035	14,309,910	1,297,459,820	12,974,598	1,298,959,820	12,989,598
Issued during the period:
Share placement	257,968,785	2,579,688	-	-	130,011,270	1,300,113
Exercise of Share Options	-	-	1,500,000	15,000	-	-
In lieu of cash for professional services	-	-	-	-	2,019,945	20,199
Settlement deferred consideration Oman	-	-	-	-	-	-
At end of period	1,688,959,820	16,889,598	1,298,959,820	12,989,598	1,430,991,035	14,309,910

The par value of the Company's shares is £0.01.

10.  GROUP CONTINGENT LIABILITIES

  Details of contingent liabilities where the probability of future payments is not considered remote are set out below, as well as details of contingent liabilities, which although considered remote, the Directors consider should be disclosed. The Directors are of the opinion that provisions are not required in respect of these matters, as at the reporting date it is not probable that a future sacrifice of economic benefits will be required and the amount is not capable of reliable measurement.

  Consideration payable in relation to the acquisition of Mining Lease Application for lithium, feldspar and quartz (Portugal lithium project)

  In June 2019 the Company exercised its option to acquire a Mining Lease Application for lithium, feldspar and quartz from private Portuguese company, Aldeia & Irmão, S.A.. The total purchase price for the acquisition is EUR €3,250,000 (~ GBP £2,790,000), which will only become due once the Mining Lease Application has been granted and the Mining Rights transferred to an entity within the Group, at which point the agreed payment schedule will consist of an initial EUR €55,000 (~ GBP £47,000) payment with the balance due in 71 equal monthly instalments. Upon delivery of the request for transfer of the Mining Rights to an entity within the Group, the Group shall provide with a bank guarantee of EUR €3,195,000 (~ GBP £2,740,000) that will be reduced in accordance with the 71 monthly instalments. As at 30 June 2021 the mining lease has not been granted.

11.  EVENTS AFTER THE REPORTING DATE

There were no Events After the Reporting Date to report.

Regulatory Information

This Announcement contains inside information for the purposes of the UK version of the market abuse regulation (EU No. 596/2014) as it forms part of United Kingdom domestic law by virtue of the European Union (Withdrawal) Act 2018 ("UK MAR").

**ENDS**

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For further information please visit www.savannahresources.com or contact:

Savannah Resources PLC David Archer, CEO	Tel: [phone]
SP Angel Corporate Finance LLP (Nominated Advisor) David Hignell / Charlie Bouverat	Tel: [phone]
finnCap Ltd (Joint Broker) Christopher Raggett/ Tim Redfern	Tel: [phone]
WH Ireland Limited (Joint Broker) Jessica Cave/ Ben Good (Corporate Finance) Adam Pollock/ Jasper Berry (Corporate Broking)	Tel: [phone]
Camarco (Financial PR) Nick Hennis / Gordon Poole	Tel: [phone]

About Savannah

Savannah is a diversified resources group (AIM: SAV) with two development stage projects, Mina do Barroso, a hardrock lithium project in Portugal which has the largest spodumene lithium resource in Europe, and the world-class Mutamba Heavy Mineral Sands Project in Mozambique, which is being developed in a consortium with the global major, Rio Tinto. The Board is committed to serving the interests of its shareholders and to delivering outcomes that will improve the lives of the communities we work with and our staff.

The Company is listed and regulated on AIM and the Company's ordinary shares are also available on the Quotation Board of the Frankfurt Stock Exchange (FWB) under the symbol FWB: SAV, and the Börse Stuttgart (SWB) under the ticker "SAV".

 

END

 

 

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